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Climate Change, Water Scarcity in Agriculture and the Economy-Wide Impacts in a CGE Framework

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  • Ponce, Roberto
  • Parrado, Ramiro
  • Stehr, Alejandra
  • Bosello, Francesco

Abstract

This paper analyzes the economic impacts of changes in water availability due to climate change. We develop a new modeling approach as an alternative to include water as a production factor within a global CGE model. We tailor the structure of the ICES model to characterize the key features of the world economy with a detailed representation of the agricultural sector. In order to reach this objective, a new database has been built to explicitly consider water endowments, precipitation changes, and unitary irrigation costs. Results suggest different economic consequences of climate change depending on the specific region. Impacts are related to change in crop production, endowment demands, and international trade.

Suggested Citation

  • Ponce, Roberto & Parrado, Ramiro & Stehr, Alejandra & Bosello, Francesco, 2016. "Climate Change, Water Scarcity in Agriculture and the Economy-Wide Impacts in a CGE Framework," EIA: Climate Change: Economic Impacts and Adaptation 251813, Fondazione Eni Enrico Mattei (FEEM).
  • Handle: RePEc:ags:feemei:251813
    DOI: 10.22004/ag.econ.251813
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    References listed on IDEAS

    as
    1. Roberto Ponce & Francesco Bosello & Carlo Giupponi, 2012. "Integrating Water Resources into Computable General Equilibrium Models - A Survey," Working Papers 2012.57, Fondazione Eni Enrico Mattei.
    2. Alvaro Calzadilla & Katrin Rehdanz & Richard Betts & Pete Falloon & Andy Wiltshire & Richard Tol, 2013. "Climate change impacts on global agriculture," Climatic Change, Springer, vol. 120(1), pages 357-374, September.
    3. Decaluwe, B. & Patry, A. & Savard, L., 1999. "`When Water Is No Longer Heaven Sent: Comparative Pricing Analysis in an AGE Model," Papers 9905, Laval - Recherche en Politique Economique.
    4. Inocencio, Arlene & Kikuchi, Masao & Tonosaki, Manabu & Maruyama, Atsushi & Merrey, Douglas & Sally, Hilmy & de Jong, Ijsbrand, 2007. "Costs and performance of irrigation projects: A comparison of Sub-Saharan Africa and other developing regions," IWMI Research Reports H036214, International Water Management Institute.
    5. Eboli, Fabio & Parrado, Ramiro & Roson, Roberto, 2010. "Climate-change feedback on economic growth: explorations with a dynamic general equilibrium model," Environment and Development Economics, Cambridge University Press, vol. 15(5), pages 515-533, October.
    6. Olga DIUKANOVA & James LENNOX, "undated". "Modelling Regional General Equilibrium Effects and Irrigation in Canterbury," EcoMod2008 23800030, EcoMod.
    7. Parrado, Ramiro & De Cian, Enrica, 2014. "Technology spillovers embodied in international trade: Intertemporal, regional and sectoral effects in a global CGE framework," Energy Economics, Elsevier, vol. 41(C), pages 76-89.
    8. John P. Weyant, 1985. "General Economic Equilibrium as a Unifying Concept in Energy-Economic Modeling," Management Science, INFORMS, vol. 31(5), pages 548-563, May.
    9. Strzepek, Kenneth M. & Yohe, Gary W. & Tol, Richard S.J. & Rosegrant, Mark W., 2008. "The value of the high Aswan Dam to the Egyptian economy," Ecological Economics, Elsevier, vol. 66(1), pages 117-126, May.
    10. Alvaro Calzadilla & Katrin Rehdanz & Richard S.J. Tol, 2011. "Water scarcity and the impact of improved irrigation management: a computable general equilibrium analysis," Agricultural Economics, International Association of Agricultural Economists, vol. 42(3), pages 305-323, May.
    11. Hertel, Thomas, 1997. "Global Trade Analysis: Modeling and applications," GTAP Books, Center for Global Trade Analysis, Department of Agricultural Economics, Purdue University, number 7685.
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    More about this item

    Keywords

    Environmental Economics and Policy;

    JEL classification:

    • C68 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Computable General Equilibrium Models
    • Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters and their Management; Global Warming
    • Q15 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Land Ownership and Tenure; Land Reform; Land Use; Irrigation; Agriculture and Environment
    • Q25 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Water

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